1578.HK WACC - Weighted Average Cost of Capital
The WACC of Bank of Tianjin Co Ltd (1578.HK) is 5.2%.
| Range | Selected | |
| Cost of equity | 10.6% - 18.5% | 14.55% |
| Tax rate | 6.5% - 7.5% | 7% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 5.4% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.3 | 2.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.6% | 18.5% |
| Tax rate | 6.5% | 7.5% |
| Debt/Equity ratio | 17.64 | 17.64 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 5.4% |
| Selected WACC | 5.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 1578.HK | Bank of Tianjin Co Ltd | 17.64 | 0.59 | 0.03 |
| 1216.HK | Zhongyuan Bank Co Ltd | 16.71 | 1.32 | 0.08 |
| 1551.HK | Guangzhou Rural Commercial Bank Co Ltd | 9.04 | 0.23 | 0.02 |
| 1916.HK | Jiangxi Bank Co Ltd | 24.53 | 1.29 | 0.05 |
| 1963.HK | Bank of Chongqing Co Ltd | 2.27 | 0.85 | 0.27 |
| 600908.SS | Wuxi Rural Commercial Bank Co Ltd | 0.95 | 1.01 | 0.53 |
| 601577.SS | Bank of Changsha Co Ltd | 6.71 | 1.04 | 0.14 |
| 601838.SS | Bank of Chengdu Co Ltd | 3.04 | 0.7 | 0.18 |
| 601997.SS | Bank of Guiyang Co Ltd | 6.43 | 1.13 | 0.16 |
| 6138.HK | Harbin Bank Co Ltd | 20.55 | 1.72 | 0.09 |
| Low | High | |
| Unlevered beta | 0.08 | 0.15 |
| Relevered beta | 1.45 | 2.64 |
| Adjusted relevered beta | 1.3 | 2.1 |
1578.HK's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 1578.HK:
cost_of_equity (14.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.3) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.